Sunday, January 15, 2012

EU mulling sanctions against Hungary III

By JACK EWING and JAMES KANTERBUDAPEST — Faced with what critics say is an alarming drift away from democracy by one of its members, the European Union gave the Hungarian government a final warning Wednesday that it would face the start of formal legal action by next Tuesday unless it modified a series of measures that threaten the balance of power in the country.

The unprecedented warning by the European Commission, the European Union’s executive arm, came in response to the passage of a new Constitution and a number of laws at the end of last year that remove checks and balances on the government of Prime Minister Viktor Orban in areas like central banking, the judiciary and the media.

In addition, Olli Rehn, the European Union commissioner for economic and monetary affairs, warned separately that Hungary faced the possible suspension of valuable European Union development assistance unless it did more to control its budget deficit.

Thorbjoern Jagland, secretary general of the Council of Europe, said by telephone on Wednesday that “there’s a real danger of Hungary going off the rails.” The council, based in Strasbourg, France, is responsible for enforcing the European Convention on Human Rights.

The escalating political confrontation with Hungary comes at a decidedly inconvenient time for Europe as well as for the government of Mr. Orban. The euro zone is struggling to survive a debt crisis while its economy slows markedly. But Hungary can ill afford to alienate its European Union partners when it is also heading into recession and negotiating for financial aid from the International Monetary Fund and the European Union to avoid defaulting on its debt.

“This adds to the pressure on Hungary,” said Zoltan Arokszallasi, an economic analyst at Erste Bank Hungary in Budapest.

Mr. Arokszallasi said the government of Mr. Orban, which has adopted a more conciliatory tone in recent days, would have little choice but to make concessions.

“It is likely the government will take adequate steps,” Mr. Arokszallasi said. “From a financial point of view there is no alternative.”

In a statement, the Hungarian government said it was “committed to universal European values” and was “ready for negotiations and to find solutions” with the commission about any of its concerns, The Associated Press reported.

The commission said that it “remains preoccupied that a number of the new provisions may violate E.U. law” and that it “reserves the right to take any steps that it deems appropriate, namely the possibility of launching infringement procedures” — a European Union term for a formal lawsuit. The commission said it planned to complete a full legal analysis of the Hungarian laws within days and make a decision Tuesday on whether to start a process that could eventually lead to a lawsuit.

Foreign critics as well as protesters in Hungary accuse Mr. Orban of pursuing a policy of creeping authoritarianism, using his overwhelming majority in Parliament to make sweeping changes and curtail freedom of the press and the judiciary. Of particular concern to Brussels are the independence of the national central bank, and mandatory early retirement rules that allow the government to force out judges and prosecutors and appoint its own candidates to the positions. Brussels has also expressed concern about the independence of the national data protection authority.

Hungary, which has a long history of excessive budget deficits, technically kept its budget shortfall below 3 percent of gross domestic product last year, in line with European Union rules. But the European Commission said that the result was achieved by one-time factors and that the sustainability of the budget underwent a “severe deterioration” last year, suggesting that higher deficits were likely in the future. Hungary took “no effective action” to rein in its deficit, the commission said.

European officials had hoped that the prospect of losing sorely needed financial assistance from the union and the I.M.F. to shore up the economy would have led Mr. Orban and his government to back down by now, at least on the measures concerning the central bank.

Instead, the standoff has continued, prompting the warning from the commission Wednesday that it is prepared to take Hungary to court to reverse what critics fear is a slow return to the heavy-handed state that prevailed before the fall of Communism more than two decades ago.

“The commission recalls that a legally stable environment, based on the rule of law, including respect for media freedom, democratic principles and fundamental rights, is also the best guarantee for citizens’ trust and confidence of partners and investors,” it said. “This is particularly vital in times of economic crisis. The swiftest way to lay to rest the concerns mentioned would of course be action by the Hungarian authorities themselves.”

A formal European case could take months.

Viviane Reding, the European Union commissioner for justice, suggested Wednesday that Mr. Orban was abusing his parliamentary majority to reshape the Hungarian Constitution for the benefit of his Fidesz Party, rather than for the benefit of the country.

“A dominant position brings with it a special responsibility,” Ms. Reding said. The Hungarian government “should make use of its two-thirds majority in a responsible manner, and always fully in line with E.U. law.”

Mr. Jagland of the Council of Europe sent a letter Wednesday to Janos Martonyi, the Hungarian foreign minister, inviting him to work jointly to examine some of the most contested laws on media freedom and religious expression to see if they ran counter to the European Convention and, if necessary, to work on correcting them.

Mr. Jagland said the council was best placed to examine those laws, as there was little the European Union could do to force changes in those areas.

He said that if Hungary failed to modify its laws in line with its commitments as a member of the Council of Europe, aggrieved citizens were entitled to bring a case against Hungary at the European Court of Human Rights in Strasbourg.

“Our concerns are about very important components of a democratic society,” Mr. Jagland said.